US factory output climbed in July, lifted by auto production

Auto sales jumped 5 percent to 1.5 million units, with luxury brands such as Acura, Audi and Lincoln posting the biggest gains.

US factory production increased by 0.8 percent in July, marking a strong recovery after a 0.3 percent decline in the previous month, the Federal Reserve reported Friday.

While industrial production has picked up over the last few months, it is still languishing well below the levels seen in 2014.

Capacity utilization, which measures industrial slack, increased 0.3 percentage points to 78.0% in July from June.

Mining production edged up 0.2 per cent, while utilities production fell 1.0 per cent.

Manufacturing production rebounded strongly in July, up 0.8 percent, but those gains came from a June that was revised lower, down 0.3 percent. Food prices rose 0.6 percent in June.

Economists polled by Reuters had forecast the PPI edging up 0.1 percent last month and falling 0.9 percent from a year ago. Improving U.S. demand will help cushion factories from weakening global markets, the stronger dollar and the slump in oil prices.

Read the Federal Reserve release. (Note that the data were also updated with a new base year, changing it from 2007=100 to 2012=100.) Capacity utilization for manufacturers increased from 75.7 percent to 76.2 percent.

Friday’s report further revised the June readings. Utility output, which often fluctuates sharply from month to month depending on weather, fell 1 percent. Mining, which includes oil and gas wells, rose 0.2 percent.

Between July, 2013 and 2014, by contrast, constant dollar durable goods production soared by 7.25 percent – after dipping by 0.66 percent the previous year.

But “in light of the renewed drop in crude oil prices, we foresee ongoing weakness in the sector constraining headline industrial production activity”, said Greg Daco, economist with Oxford Economics.